I have a 2 monitor setup, a CRT and a flat panel, and I have had always VDPAU_NVIDIA_SYNC_DISPLAY_DEVICE set to DFP-0 (set automatically in .bashrc), but didn't notice any effect (tearing is about 2 or 3 cm from the top of the display).

The intro of Doctor Who is specially good for spotting the tearing (it has a lot of movement). With XV it works fine. The codec is DivX which isn't supported in my card, so only "-vo vdpau" is actually in use.